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Cascade: No. 61, Spring 2006

Maximizing Income For the Poor

Saving and investing are keys to economic growth for counties, companies, and families. Low- and moderate-income households are no exception. However, the reality for many living in poverty is that billions of dollars of income from potential tax refunds and government benefits are unclaimed because of complex application processes or other barriers. Solutions for Progress, a public-policy consulting firm in Philadelphia working for social change, believes it has helped solve the problem by creating The Benefit Bank, a technology-based income-enhancement tool.

Robert J. Brand, CEO of Solutions for Progress, said: “The Benefit Bank was designed to help people overcome barriers that have prevented them from receiving public benefits for which they are eligible. The increased income will help individual and family self-sufficiency and hopefully enable them to make economic and social progress.”

The Problem

Current census data show that 34.8 million people in the U.S. — including 12.2 million children — are living below the federal poverty level. Millions more live just above the poverty line. There are government programs to help, but most serve far fewer people than are eligible.

Solutions for Progress estimates that each year low-income people in the U.S. leave unclaimed more than $35 billion in public health-care and food stamp benefits and tax refunds. This hinders people from accumulating assets and moving out of poverty.

Tax refund and public benefit income-enhancement programs are under-enrolled largely because nearly all of them have cumbersome and duplicative enrollment procedures that require potential recipients to interact with a number of agencies in different locations. This is not only a problem for potential recipients but also a challenge to public bureaucracies at a time of budget constraints and staff cuts.

The Solution

The Benefit Bank (TBB) reduces the obstacles to claiming benefits and tax refunds for both individuals and government agencies. The software-based system processes federal and state tax returns and a range of federal and public health and social service benefits. Counselors with two days of training can guide a user through a question-and-answer format that is written at a fourth-grade reading level.

Public agencies, health and social service organizations, and union and other employer human-resource offices can host TBB. They can help users learn to use their income strategically to support education, job training, homeownership, and other steps toward self-sufficiency. Some TBB sites are currently focusing on asset strategies in all of these areas. TBB is funded through contracts with state and local governments and money provided through national sponsors.

Free to all users and host organizations, it is intended for use by a wide range of organizations to offer assistance to individuals and families, thereby strengthening them and their communities. This program works by building relationships between counselors and clients, host sites and the community, and the community and policymakers. Use of TBB not only offers an opportunity to help neighbors but also provides information to help organizations advocate more effectively for policies that better serve their communities.

The key to developing and disseminating TBB is to create local networks of social-service agencies, churches, and government offices that have staff or volunteers who counsel low- and moderate-income people on public-benefit or tax-refund programs. In order to offer TBB services, organizations need a Pentium computer, Internet access, a printer, and staff or volunteers trained in the use of the program.

The TBB dissemination strategy increases the volume and diversity of access points for potential benefit applicants and strengthens and broadens the relationship among organizations pursuing an anti-poverty mission. Solutions for Progress has found that disparate organizations brought together to implement TBB are crossing divides and building new relationships in working on poverty-related issues.

The Experience

First introduced in Philadelphia as a pilot program in 2004, TBB served just over 400 people and secured almost $800,000 in federal tax refunds and credits. In January 2005, a new, more robust program was released and used in sites in Pennsylvania, Florida, and Kansas, assisting over 800 people to receive $1.1 million (an average of $1,375).

Today, TBB is available for tax filing at over 100 sites in Pennsylvania, Florida, Kansas, Ohio, Texas, and Washington, D.C. Fully programmed benefits are available in Pennsylvania, Florida, and Ohio. From January 1 to February 24, 2006, TBB has served over 2,000 people and generated more than $2.5 million in tax refunds and credits.


Decreasing poverty benefits all of us. TBB is an income-enhancement tool that can be part of a community-wide response to poverty.

By its nature, TBB recruits and engages stakeholders in a continuing dialogue about public policies that affect individuals and families with low and moderate incomes.

An expansion of TBB to all 50 states is planned within the next five years.

For information, contact Leslie Winder at (215) 701-6123 or lwinder@thebenefitbank.com; www.thebenefitbank.com.

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Federal Reserve Bank of Philadelphia
Community Development Studies & Education Department
Ten Independence Mall
Philadelphia, PA 19106-1574

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